Public Service Commission Approves Potomac Electric Power Company's Purchase of Receivables Program Tariff Update

Strategic Insights -

The Public Service Commission of the District of Columbia has approved a revised tariff for Potomac Electric Power Company's (Pepco) Purchase of Receivables (POR) program, which allows retail electricity suppliers to sell their unpaid customer bills to the utility at a discounted rate. The revised tariff update aims to reduce the financial risk for suppliers and provide competitive suppliers with a payment assurance mechanism for their unpaid customer bills. The POR program is designed to promote customer choice, increase competition, and reduce the commodity price of electricity in the District of Columbia.

Key Takeaways:

  • The Public Service Commission of the District of Columbia has approved a revised tariff for Pepco's Purchase of Receivables (POR) program, which will become effective upon publication in the D.C. Register.
  • The revised tariff update aims to reduce the financial risk for suppliers and provide a payment assurance mechanism for their unpaid customer bills.
  • The POR program is designed to promote customer choice, increase competition, and reduce the commodity price of electricity in the District of Columbia.
  • The Commission has directed Pepco to file a tariff update that will have no impact on non-POR ratepayers and is consistent with the previous Order No. 22259.
  • The Commission has noted that the proposed POR discount rate is high and may render existing contracts uneconomic and deter suppliers from entering the District's retail electricity market.
  • The Retail Energy Supply Association (RESA) has expressed concerns that the high POR discount rate may harm retail suppliers and competition in the District.

Statistics:

  • The revised tariff update will apply to all customers served under Schedules R and MMA, Small Commercial customers served under Schedules GS-LV-ND, T, SL, TS, TN, and OL-LED, and Large Commercial customers served under Schedules GS-LV, GS-3A, MGT-LV, GT-LV, GT-3A, GT-3B, and RT.
  • The proposed Discount Rate for Residential customers is 11.3079% on Schedules R and MMA, and 0.0000% for Small Commercial customers, Schedules GS-LV-ND, T, SL, TS, and OL-LED.
  • The Commission has rejected Pepco's proposed calculation of the 2024 POR Discount Rate and directed the Company to file a new tariff update using Residential Calendar Year 2022 Bad Debt Expenses and Late Fees Revenues as a proxy for calculating the Company's 2024 residential POR Discount Tariff.

Sources:

  • Public Service Commission of the District of Columbia
  • Order No. 22442
  • PEPPOR-2025-01, Potomac Electric Company's Revised Purchase of Receivables Supplier Discount Rate Update
  • RESA Comments
  • Order No. 22259
  • Order No. 22244
  • Formal Case No. 1085, In the Matter of the Investigation of a Purchase of Receivables Program in the District of Columbia